<Translation> [Disclosure Booklet] Explanatory Documents on the Status of Business and Property for the fiscal year ended Dec 31, 2017 This disclosure booklet is prepared by the Company to publish with utilization of internet under Article 46-4 of the Financial Instruments and Exchange Law. Contents I Outline and Organization 1. Corporate Name ………………………………………………………………………………………………………… 1 2. Registration Date （ Registration Number ） …………………………………………………………………………… 1 3. History and Organization ………………………………………………………………………………………………… 1 4. Shareholders in the Top 10, Number of Shares Held and Percentage of Voting Rights ………………………… 3 5. Names of Board of Directors and Statutory Auditor ………………………………………………………………… 3 6. Names of Employees Specified by Cabinet Order …………………………………………………………………… 3 7. Business Operation ……………………………………………………………………………………………………… 4 8. Addresses of Head Office and Other Branches ……………………………………………………………………… 5 9. Other Business Operation ……………………………………………………………………………………………… 5 10. Engaged Businesses included in the Matters Set Forth in Article 29-2(1)(VI) of FIEL and Article 7(3)(a), (3)-2, (3)-3(a) and from (4) to (9) of the Cabinet Office Ordinance on Concerning Financial Instruments Business …………………………………………………………………………………………………………………… 6 11. Complaint Processing and Dispute Resolution ……………………………………………………………… 6 12. Financial Instruments Firms Associations and Certified Investor Protection Organization Memberships………… 7 13. Financial Instruments Exchange Memberships………………………………………………………………………… 7 14. Investor Protection Fund Membership ………………………………………………………………………… 7 II Business Overview 1. Business Outline for the Current Period ……………………………………………………………………………… 8 2. Key Financial Data ……………………………………………………………………………………………………… 10 III Financial Matters 1. Financial Information ………………………………………………………………………………………………………12 2. Major Lenders and Borrowings ………………………………………………………………………………………… 18 3. Securities Held (Non-Trading) ……………………………………………………………………………………………18 4. Derivative Transactions (Non-Trading) …………………………………………………………………………………18 5. External Audit ………………………………………………………………………………………………………………19 6. Others ……………………………………………………………………………………………………………………… 19 IV Internal Control Structure 1. Overview of Internal Control …………………………………………………………………………………………… 20 2. Condition of Customers' Assets Segregation ………………………………………………………………………… 22 V Status of Consolidated Subsidiaries, etc. …………………………………………………………………………………26 I Outline and Organization 1. Corporate Name Citigroup Global Markets Japan Inc. (the Company) 2. Registration Date September 30, 2007 ( Registration Number ) (The Director-General of the Kanto Finance Bureau (Kinsho) No.130) 3. History and Organization (1) History Year History 1972 ･ Smith Barney Tokyo Representative Office established 1977 ･ Salomon Brothers Asia Limited established in Hong Kong 1980 ･ Salomon Brothers Asia International Tokyo Representative Office established ･ Smith Barney Tokyo Branch opened 1982 ･ Salomon Brothers Asia Limited Tokyo Branch opened 1987 ･ Becomes Remote Member of Osaka Securities Exchange 1988 ･ Becomes Official Member of Tokyo Stock Exchange 1989 ･ Becomes Standing Underwriting Manager for JGB syndication ･ Becomes Clearing Member of Tokyo International Financial Futures Exchange ･ Becomes Special Participant of Nagoya Stock Exchange 1991 ･ Becomes Official Member of Osaka Securities Exchange 1998 ･ Salomon Smith Barney (Japan) Limited formed upon Salomon Brothers Asia Limited's acquisition of all operations of Smith Barney Tokyo Branch 1999 ･ Name changed to Nikko Salomon Smith Barney Limited upon acquisition of Nikko Securities' institutional businesses ･ Becomes Official Member of Nagoya Stock Exchange 2004 ･ Begins operation as Nikko Citigroup Limited 2008 ･ Nikko Citi Holdings Inc. established 2009 ･ Name changed to Citigroup Global Markets Japan Inc. 2017 ･ Japan headquarters moved to Otemachi Park Building 1 (2) Organization Chart As of December 31, 2017 2 4． Shareholders in the Top 10, Number of Shares Held and Percentage of Voting Rights As of December 31, 2017 Number of shares Percentage of Name of shareholders held voting rights Citigroup Japan Holdings G.K. 3,842,000 100.00% Total 1 party 5． Names of Board of Directors and Statutory Auditor As of December 31, 2017 executive/ Position Name Representation non-executive Representative Director, Anthony P. Della Yes executive President and CEO Pietra, Jr. Director, Deputy President Kuniyoshi Hayashi No executive Director, Deputy President Yusuke Asai No executive Director Koichi Tanaka No executive Director, Chairman Tatsuo Tanaka No executive Statutory Auditor Mamoru Sato executive 6． Names of Employees Specified by Cabinet Order (1) Persons overseeing the operations concerning the guidance for compliance with the laws and regulations, etc. with respect to the financial instruments business As of December 31, 2017 Name Title Matt van Weezel Head of Compliance Division, Chief Internal Control Officer Yasuto Hashinaga Interim General Counsel (2) Persons overseeing the division to make an advice or conducting management with respect to the investment advisory business and investment management business Not applicable 3 7．Business Operation (1) Type I Financial Instruments Business ① Businesses under Article 28(1) (i) of Financial Instruments and Exchange Law (hereinafter referred to as the "FIEL") (i) Sale and purchase of Securities (excluding those falling under the category of Derivative Transactions; the same shall apply hereinafter), Exchange traded Derivatives (excluding Financial Instruments (limited to those in Article 2(24) (iii-2)) or Financial Indices (limited to the value of the Financial Instruments or figures calculated based thereon) related Exchange traded Derivatives (the same shall apply "Commodities related Exchange traded Derivatives" hereinafter ) or Foreign Exchange traded Derivatives Transactions (excluding sale and purchase of Securities falling under Article 2(8) (x) of FIEL) (ii) Intermediary ("Baikai"), brokerage ("Toritsugi") (excluding Brokerage for Clearing of Securities,etc.) or agency service ("Dairi") for sale and purchase of Securities, Exchange traded Derivatives or Foreign Exchange traded Derivatives Transactions (excluding intermediary ("Baikai"), brokerage ("Toritsugi") or agency service ("Dairi") for sale and purchase of Securities falling under Article 2(8) (x) of FIEL) (iii) Intermediary ("Baikai"), brokerage ("Toritsugi") or agency service ("Dairi") for agency ("Itaku") of the following transactions; (a) Sale and purchase of Securities conducted in a Financial Instruments Exchange Market or Exchange traded Derivatives; or (b) Sale and purchase of Securities conducted in a Foreign Financial Instruments Market (meaning a market in a Foreign State similar to Financial Instruments Exchange Market; the same shall apply hereinafter) or Foreign Exchange traded Derivatives Transactions (iv) Brokerage for Clearing of Securities, etc.; or (v) Secondary Distribution of Securities or exclusive Offer to Sell, etc. to Professional Investors (vi) The handling of a Public Offering or Secondary Distribution of Securities, or the handling of a Private Placement of Securities or exclusive Offer to Sell, etc. to Professional Investors ② Business under Article 28(1) (ii) of FIEL Over-the-Counter Transactions of Derivatives or intermediary ("Baikai"), brokerage ("Toritsugi") ( excluding Brokerage for Clearing of Securities,etc.) or agency service ("Dairi") therefor; or, Brokerage for Clearing of Securities, etc. in relation to Over-the-Counter Transactions ③ Business under Article 28(1) (iii) (a) of FIEL Wholesale Underwriting of Securities that are specified by a Cabinet Order as those for which management of risks of loss is highly necessary ④ Business under Article 28(1) (iii) (b) of FIEL Wholesale Underwriting of Securities other than those listed in Article 28(1) (iii) (a) of FIEL ⑤ Business under Article 28(1) (iii) (c) of FIEL Acts listed in Article 2(8) (vi) that are other than Wholesale Underwriting of Securities ⑥ Securities, etc. Management Business (2) Type II Financial Instruments Business (3) Investment Advisory and Agency Business ① Business under Article 28(3) (ii) of FIEL. Agency or intermediation for the conclusion of an Investment Advisory Contract or a Discretionary Investment Contract (Note) The Company obtained registration to conduct the Investment Advisory and Agency Business on April 25th 2017 and commenced the Business on Jun 20th 2017. 4 (4) Supplemental Business Operation to Financial Instruments Business (i.e. the business conducted by the Company listed in Article 35(1) of FIEL） ① Lending and borrowing of Securities, or intermediary ("Baikai") or agency service ("Dairi") thereof ② Money loan incidental to a margin transaction ③ Money loan secured by Securities that are deposited for safe custody from customers ④ Agency service ("Dairi") for customers concerning Securities ⑤ Agency service ("Dairi") of the business pertaining to payment of earnings, redemption money or cancellation money with regard to beneficiary securities of Investment Trusts or foreign investment trusts, or the business pertaining to delivery of the Securities or any other assets belonging to the trust property pertaining to the Securities ⑥ Agency service ("Dairi") of the business pertaining to distribution of money, distribution of refunds or residual assets or payment of interest or redemption money with regard to Investment Securities, Investment Equity Subscription Rights Certificates or Investment Corporation